August 17, 2010
RE: File No: 4-606
Dear Ms. Murphy:
I am a financial planner and a registered investment advisor. In looking at teh comments you receive i woudl remind you that only about 10% of those in the financial advice area are CFP's and hold themselves to the higher fiduciary standard adnthe balance woudl rather have as littel legal responsibility as possible. It is not the many number of sales individuals whose voices shoudl be headed but those for whoem the best intersts of the client consumer are paramount. In my practice, I have been servicing clients under a fiduciary standard of care for 15 years. I strongly urge you to extend the Advisers Act fiduciary standard of care to all financial professionals who provide personalized investment advice to retail clients.
It is unfair to consumers that the quality of advice they receive from a financial professional is dependent on the professionals registration or title. Its no wonder consumers are confused, and do not know whether their financial professional is looking out for their best interests. I can tell you from my personal experience that adhering to the fiduciary standard of care and putting my clients interests ahead of my own benefits my clients and my business.
I am not so sure that it is possible to have all advisors subject to a fiduciary standard as so many have a business structure and relationships that contian inherent conflicts of interest. What I would request is a requirement for a very clear statement taht an individual is acting as a fiduciary or is nto acting as a fiduciary but as a sales agent whose intersts may be in conflict to that of their clients. This nees to be a simle separate statement, perhaps required in any securites tag line on stationary and business cards and given to teh client whenever any account is opened. It must not be hidden inthe fine print of a larger document. Prospectus's and other disclosures are simply not read by 99.9% of clients.
My clients do not really the legal distinctions. They assume that I and any other advice provider work in their best interests based on the established trust between us. That is why a clear disclaimer is required. As a fiduciary, I can choose to operate in a business model that is best for my client. The key is fully disclosing, and avoiding and fairly managing conflicts of interest. Providing financial advice with fiduciary accountability does not reduce services to middle Americans. It insures that the services consumers receive will be in their best interests -- not in the best interests of the financial intermediary or his or her company.
I urge you to recommend to Congress that it is necessary and appropriate in the public interest and for the protection of consumers to extend the fiduciary standard to broker-dealers, who provide personalized investment advice, and to initiate a rulemaking to achieve this long overdue consumer reform. Those who hold themselves out as providign independant advise must be held to the fiduciary standard. Those who are not must clearly disclose that they are agents for teh investment and insurance companies and their primarily responsibility is not to thier client.
Sincerely,
Richard Hall